Keeping up the Kluge winery

Mere weeks before the auction that will convey Patricia Kluge’s wine empire to the highest bidders, 20 former employees of the Kluge Estate Winery & Vineyard continue to maintain the foreclosed property’s vines and facilities. The workers, says winery employee Tim Rausse, are touching up everything from a 34,000-square-foot carriage house to an unglamorous “modular office” before the auction. The hum of a pressure washer is audible; Rausse explains that an employee is cleaning the winery production building.

The Kluge Estate Winery & Vineyard, divided into six tracts totaling roughly 900 acres, will be sold at absolute auction on April 7—an event that may attract business tycoon and potential bidder Donald Trump, reportedly a friend of the Kluge family.

When a winery doesn’t make bank, then the bank takes back the winery. However, after Farm Credit of the Virginias foreclosed on the Kluge operation, the subject of a $34.8 million lien, a December foreclosure auction failed to attract a sufficient bid. The bank bought the winery back for $19 million and plans to offer the business and property in six separate tracts, totaling more than 900 acres, at an April 7 absolute auction. The farm and winery equipment will be auctioned the following day.

Gregory Brun, former director of winery and vineyard operations at Kluge Estate, now serves as Chief Operating Officer for Grand Cru Properties, a limited liability company launched by Farm Credit to manage the property until its sale. “Right now, Farm Credit is not making wine,” says Brun. However, he says, the current staff is “doing what needs to be done at the winery.”

Asked what will become of their jobs if a purchaser doesn’t preserve the winery operation, Brun says he has his fingers crossed.”

“That would be bad for me, for the team, and for the wine industry here in Virginia,” says Brun. “This is a significant operation.”

Multiple prospective buyers have toured the site, says Brun. From March 24 until April 6, auction house J.P. King will conduct tours by appointment from 10am to 5pm. The J.P. King website also provides a number for those prospective bidders who wish to schedule helicopter tours of the winery. The helicopter tour, says a representative of Richmond-based HeloAir, costs $895 an hour.

Last month, local attorney Steve Blaine and business advisor Les Goldman turned heads and haircuts when they bid for Kluge’s foreclosed Albemarle House mansion on behalf of business behemoth Donald Trump. Now it seems that Trump himself may make an appearance at the auction.

“If he winds up bidding at the sale, he winds up bidding at the sale,” says William Shmidheiser III, the attorney representing Farm Credit in three civil suits against Kluge and husband Bill Moses. “He says he’s going to be there.” Shmidheiser spoke with Trump on previous occasions and told C-VILLE that The Donald indicated “serious interest” in the Kluge properties.

Unlike the December foreclosure auction, however, a person would need to make the highest bid on six separate tracts rather than one. And if a bidder wanted to preserve Kluge’s operation in full, he would have to box out a developer interested in buying a 21-acre tract with subdivision rights, or any oenophile that wants to buy Kluge’s tasting room, part of a six-acre tract. Additionally, the auction is absolute, which means there is no reserve price to establish a lowest possible bid.

On Monday, as C-VILLE headed to press, Farm Credit held a teleconference with Albemarle County Circuit Court judge Cheryl Higgins to discuss the bank’s three pending lawsuits against Kluge and Moses. The former winery owners have a May 16 jury trial date with Farm Credit, to resolve the bank’s $34.8 million contract action. The bank also filed a civil suit that alleges the couple fraudulently transferred a seven-acre tract into a trust for Kluge’s son, a charge that Kluge attorney Edward B. MacMahon called “ridiculous.” And Shmidheiser says that Farm Credit and Bank of America, which holds a $22.8 million lien on Kluge’s 45-room Albemarle House, have nearly resolved a detinue action that divides up collateral within the mansion.

Kluge’s financial concerns, however, remain far from resolved. Last month, Anton Sattler Management filed a smaller complaint against Kluge in Albemarle Circuit Court. The company alleges that Kluge owes $67,590 for maintenance work on the exterior of Albemarle House, including the removal of loose paint and the application of a few more coats. Even with a fresh layer of paint, the Kluge empire seems like it may go to pieces, big and small.

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